Can a parent PLUS loan be discharged in bankruptcy?

Who owes a parent PLUS loan?

A parent PLUS loan is a federal Direct PLUS Loan made to the parent of a dependent undergraduate student. It cannot be transferred to the child. The parent who borrowed is legally responsible for repaying it.1

That stays true whatever the family has agreed. If your child has been making the payments, the loan is still in your name and collection is still directed at you.1

Some parents borrowed with an endorser, a person who agreed to repay the loan if the parent does not. The endorser cannot be the student the loan was for.1

How does bankruptcy treat a parent PLUS loan?

The student loan exception in bankruptcy law covers loans made by a governmental unit, and the undue hardship requirement applies to nearly all federal student loans. The statute looks at who made the loan, not at who went to school, so a parent PLUS loan is treated like a federal loan in a student's own name.2 4

To ask for a discharge, the parent files an adversary proceeding in their own bankruptcy case and has to prove that repaying would be an undue hardship on the parent and the parent's dependents.2 3

For federal loans there is a Justice Department process that began in November 2022. You fill out an attestation form, and the government's attorneys recommend a discharge when three conditions are met: you cannot repay now, that is likely to continue, and you acted in good faith in past attempts to repay. The bankruptcy judge makes the final decision.3 4

Which hardship presumptions can fit a parent borrower?

On the second condition, the guidance tells government attorneys to presume that the inability to repay will continue in five circumstances. Two of them depend only on dates: your age and how long the loan has been in repayment.4

• You are age 65 or older.4
• The loan has been in a payment status other than in-school for at least ten years. For a consolidation loan, time in repayment on the original loans counts.4
• You have a disability or chronic injury that affects your income potential.4
• You have been unemployed for at least five of the last ten years.4
• The degree the loan was taken out for was not obtained. The guidance words this as the debtor failing to obtain the degree, and it does not address a parent whose child did not finish. State the facts on the form and ask a lawyer how your court is likely to read it.4

The form tells you to mark every circumstance that applies, not only one. A presumption helps with the second condition only. It can be rebutted with concrete facts, and before the court you still carry the burden of proving every element of undue hardship.4

What if the payments stopped being affordable when you retired?

The first condition is a comparison, not an opinion. The government attorney works out your allowable expenses using IRS standards and compares them with your household gross income, which includes Social Security benefits. If allowable expenses exceed gross income, that condition is met.4

If your income covers some payment but not the full standard monthly payment, the attorney is told to consider a partial discharge, where the court wipes out part of the debt and leaves the rest.4 3

Assets are considered too, but the guidance says requests to liquidate a primary residence or a retirement account should be exceptionally rare. It also notes that courts disagree about how exempt property should count, so this part depends on where you file.4

What can end or ease a parent PLUS loan outside bankruptcy?

Several routes run through the Department of Education and do not involve a court.

• Death discharge: the loan is discharged if the parent borrower dies or if the student it was taken out for dies, once the servicer receives acceptable proof of death.5
• Disability discharge: a total and permanent disability discharge cancels Direct Loans, and a parent PLUS loan is a Direct PLUS Loan. It depends on the borrower's own disability.6 7 1
• Repayment plans: Federal Student Aid says parent PLUS borrowers with no loans disbursed on or after July 1, 2026 can use the Standard, Graduated and Extended plans, and that a parent PLUS loan taken out or consolidated after July 1, 2026 is limited to the Tiered Standard Plan, with no income-driven plan and no Public Service Loan Forgiveness. The agency says this information is still being updated, so confirm your options on StudentAid.gov or with your servicer.1
• Getting out of default: rehabilitation and consolidation are the two main ways out, and your loan holder helps with a defaulted loan for free.8 9

Trying these does not count against you in a later bankruptcy case. Making a payment, applying for a deferment, forbearance or consolidation, and talking with your servicer about options are all steps the Justice Department guidance treats as evidence of good faith.4

What should you check first?

Confirm exactly which loan you hold. A parent PLUS loan in your name, a private loan you co-signed and a private loan you took out yourself are different situations with different rules.2

Your StudentAid.gov account lists your federal student loans and your servicer. It does not show private loans, so for those you need the lender's own paperwork.8 1